The ratings assigned to MCPL incorporate its strong sponsor profile and diversified operations & revenue streams. Assessment of financial risk profile derives support from the company’s low leveraged capital structure (adjusted for sizeable cash balances & term deposit receipts on a consolidated basis) and adequate debt servicing ability, maintained through stable projected dividend stream from investments, significant cash flow of associated companies and sizeable liquidity on the balance sheet of group companies and related parties. Moreover, planned restructuring of existing debt on balance sheet is expected to result in sizeable cash accumulation over the rating horizon. Going forward, ratings are dependent on sound debt servicing coverage, maintenance of leverage indicators in line with benchmarks for the assigned ratings and management undertaking planned improvements in corporate governance structure including strengthening of board composition, oversight and management team along with implementation of comprehensive framework for monitoring performance of subsidiaries.

Incorporated in 2010, MCPL is an investment holding company, which is part of a diversified group with strong financial profile and presence across a broad array of sectors, namely shipping (around one-fifth share in the total containerized throughput of the country), telecommunications, logistics, real estate development, construction materials, energy and consumer goods. MCPL is envisioned to achieve synergies across the group’s portfolio through innovative expansion with an aim to achieve consistent steady growth. Currently, MCPL’s strategic investments comprise wholly-owned subsidiaries including Imperial Developers & Builders (Private) Limited (IDBL) and Karachi Properties Investment Company (Private) Limited (KPI), along with controlling stakes in Hub Power Company Limited (Hubco) and Haleeb Foods Limited (HFL). Recently, IDBL completed the construction and sale of Pakistan’s first L.E.E.D certified commercial office building. The company is also in process of construction of a 2.5million square feet mixed use property through an already owned 4 acre plot at the former Metropole Hotel site in Karachi. HFL has a prominent position in the local packaged milk industry with established market niche of its end products.

The assigned ratings are underpinned by MCPL’s significant stake alongside management control in Hubco, the largest independent power producer in the country. Historically, Hubco has demonstrated a stable dividend payout. With an aim to boost and diversify its generation portfolio, Hubco is currently undertaking multiple projects in the energy space including setup of two 660MW coal fired power plants at Hub under a joint venture with China Power International Holdings and a 330MW mine mouth coal power plant at Thar. These projects, along with other initiatives are expected to result in increasing dividend payouts over the medium to long term although quantum of dividend in the near term may be impacted by sizeable accumulation of receivables due to circular debt and elevated funding requirements for new investments. Hubco has also invested US$ 20million in Sindh Engro Coal Mining Company, a joint venture envisaged to develop a coal mine at Thar.

For further information on this rating announcement, please contact Mr. Javed Callea (Ext: 201) or Mr. Talha Iqbal (Ext: 213) at 92-21-35311861-70 or fax to 92-21-35311873.

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